Trading Update: Monday May 22, 2023

S&P Emini pre-open market analysis

Emini daily chart

• The Emini found sellers and profit-taking at the May 1^st high. The two-bar breakout that ended on May 18^th is strong enough so odds favor 2^nd leg up. This means that any pullback is likely to be minor.
• The bears want last week’s rally to fail and the market to continue the expanding triangle top. However, the rally is likely too strong for bears to sell without a 2^nd leg up.
• The bulls have an opportunity to get an upside breakout and must continue showing signs of strength.
• Traders will pay close attention to see how determined the bulls are. If the market gets a pullback with three or more consecutive bear trend bars, that will disappoint the bulls and increase the odds of more sideways trading.
• The bulls will see any pullback below Friday’s low as a setup for a high 1 buy.
• The bulls want today to form a bull bar closing on its high, which would be a breakout pullback buy setup. Next, they want to trigger the buy signal bar with a strong bull entry bar tomorrow.

Emini 5-minute chart and what to expect today

• Emini is up 5 points in the overnight Globex session.
• The overnight Globex market has gone sideways to up since its open.
• Looking at the 60 Minute chart, the bears still want a second leg down from the May 19^th selloff.
• Because of the above reasons, the bulls on the daily chart want a reversal up and a bull bar closing on its high.
• The means that traders should be open to the possibility of a bull trend day. The bears want the opposite and will try and disappoint the bulls as much as possible.
• As I often say, traders should expect a lot of sideways trading on the open. This is because the open usually has many reversals. Most traders should consider not trading for the first 6-12 bars and be patient.
• Lastly, traders should try and catch the opening swing that often begins before the end of the second hour. It is common for the opening swing to happen after the formation of a double top/bottom or a wedge top/bottom.

Emini intraday market update

• The Emini rallied on the first 2 bars of the day. The bears got a 2^nd leg trap, and the market sold off below Friday’s end-of-day range.
• Because of the rally on bar 1-2, the odds favored a trading range day and not a bear trend day.
• The market has gone sideways, and as of 8:40 AM PT the market is in the middle of the range.
• At the moment, the market is deciding on if it should test the close of bar 2 or test the close of bar 8.
• Overall, the market will probably be in a trading range for some time.

Friday’s Emini setups

Al created the SP500 Emini charts.

Here are several reasonable stop entry setups from Friday. I show each buy entry with a green rectangle and each sell entry with a red rectangle. Buyers of both the Brooks Trading Course and Encyclopedia of Chart Patterns have access to a near 4-year library of more detailed explanations of swing trade setups (see Online Course/BTC Daily Setups). Encyclopedia members get current daily charts added to Encyclopedia.

My goal with these charts is to present an Always In perspective. If a trader was trying to be Always In or nearly Always In a position all day, and he was not currently in the market, these entries would be logical times for him to enter. These therefore are swing entries.

It is important to understand that most swing setups do not lead to swing trades. As soon as traders are disappointed, many exit. Those who exit prefer to get out with a small profit (scalp), but often have to exit with a small loss.

If the risk is too big for your account, you should wait for trades with less risk or trade an alternative market like the Micro Emini.

EURUSD Forex market trading strategies

EURUSD Forex daily chart

• The EURUSD is trying to reverse up. However, any bull reversal is likely to be minor. The bear channel down from the May high is tight, which increases the odds of sellers above and a 2^nd leg down.
• The bulls want to test the March 24^th bottom of the bull channel.
• Since the market is in a trading range, traders must be mindful of a potential deep pullback from the May low.
• Trading ranges often form tight bear channels that get deeper pullbacks than what seems reasonable.
• The bulls see a parabolic wedge bottom over the past 12 bars and want a strong reversal up.
• Overall, traders should expect both the bulls and the bears to become disappointed and for the market to go sideways.

Summary of today’s S&P Emini price action

Al created the SP500 Emini charts.

End of day video review

Live stream video review with Brad Wolff. Here is YouTube link:

Emini End of Day Video Review for Monday May 22, 2023

See the weekly update for a discussion of the price action on the weekly chart and for what to expect going into next week.

Trading Room

Al Brooks and other presenters talk about the detailed Emini price action real-time each day in the BrooksPriceAction.com trading room days. We offer a 2 day free trial.

Charts use Pacific Time

When times are mentioned, it is USA Pacific Time. The Emini day session charts begin at 6:30 am PT and end at 1:15 pm PT which is 15 minutes after the NYSE closes. You can read background information on the market reports on the Market Update page.